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Good afternoon, everyone. It’s Friday, July 22nd, and after skipping a week, it’s time for this week in crypto. I’m Dave Weisberger, the CEO of Coin Routes. And let’s talk first about the markets, and then we’ll talk a bit about regulation being one of my favorite topics. So as far as the market is concerned, particularly, you’re talking about a tale of two markets, you’re talking about bitcoin, you’re talking about ethereum.

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Bitcoin more or less has gone through the top of the four week trading range, but it’s kind of stuck right towards the top of that, maybe slightly above it. It’s mirroring almost exactly what the Nasdaq has been doing at this time, which shouldn’t give incredible heart to people, except for the fact that the market has seemed to rally as the likelihood of more shoes to drop have decreased. So with Celsius declaring bankruptcy since we last talked, really, there hasn’t been a whole lot of downward movement. It’s interesting that the market effectively assimilated the news that Elon Musk sold almost a billion dollars worth of bitcoin in the second quarter with pretty much a yawn, and has tracked, you know, pretty much the other markets and what it was doing over the same period of time.

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It’s also tracked with a yawn, bitcoin mining difficulty going down as it adjusts due to heatwaves in the United States, and the hash rate is still pretty strong, and the metrics in the network are still pretty strong, showing more moves towards stronger hands versus weaker hands to everything we’ve been talking about. So the fact is, the thesis that I promulgated last time, that we are in the eye of the hurricane basically, is still pretty much intact. I think that the summer seems to be sort of a respite. We’ll see the European bank, central bank raise rates half a point, which I don’t think was a terrible surprise, but it wasn’t certain either. And we’ll see how the Fed continues to move as we enter into the fall.

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The most interesting thesis when it comes to bitcoin, however, is from CryptoHayes, who has had a remarkable record of prognostication, his notion that the market would be linked to risk assets, predominantly the Nasdaq, until it delinks, I absolutely adhere to, and my thought process is simple. He makes the argument, and I’ve seen others do, that the Fed will at some point need to act to save Europe and Japan and potentially keep the US out of a deepening recession. The argument is that we are already in recession. It will be reported that way within the next couple of weeks, but we shall see.

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The point on this thesis is that the trailing edge of the hurricane, as risk assets start to get pounded as rates continue to rise, is that it might very well happen that the Fed actually opens liquidity spigots while raising rates at the same time in order to try to engineer that soft landing. We’ll see what happens. But I continue to think that it is a distinct possibility that if we do see another leg down, that will be the time that bitcoin will decouple. It is worth mentioning Ethereum, which has had a pretty strong move, much stronger upwards than Bitcoin over the last couple of weeks, certainly in the last week or two as we approach the merge. This is a big deal for Ethereum. We’ve been disappointed before. We will see how it happens. But it’s absolutely worth looking at. If Ethereum has a major upside break in its relationship to bitcoin, that could also be indicative and it’s something people to watch. So that’s the markets.

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But let’s talk a bit about regulation because it’s a very important topic. I spent this past week getting more and more bullish attending conferences such as at Bloomberg when it was basically sold out literally. I know people who couldn’t attend, the speaker couldn’t attend the speeches. And really it is a signal that traditional financial firms are all getting into crypto. This is not like 2018. It is not like crypto winter because during that period of time at Coin Routes we were talking to people in traditional finance about crypto and they were like, yeah, we’re going to wait to see how this comes out. Now we talk to people in traditional finance and oh please tell me more, how do we achieve best execution? What kind of processes should we set up? It’s a question now not if but when. And these sorts of things are very encouraging.

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From a regulatory perspective, what we saw last week was Gary Gensler say start making noises about the idea of using exemptive relief. And what he’s talking about is if a company comes and talks to him, he might provide the ability to let them operate kind of outside his regulation by enforcement regime for a while. This is a far cry from what they should be doing, which is Hester Peirce’s original idea of a safe harbor and that during which time you work with the industry to craft rules. But it shows that he understands that he can’t continue to plow ahead. At the same time, this past week when the DOJ sued past employees of Coinbase for insider trading based on wire fraud statutes, the SEC piled in and actually named nine tokens in their opinion to be securities.

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Coinbase vociferously argues that it’s not going to be determined by the SEC unilaterally. It will have to go to court if it wants to do it. And at the same time, not one, but two SEC, no CFTC commissioners actually took the time to make public statements indicating the need to have more thoughtful regulation. This is a very big deal as well. The crypto market is at a juncture where most people in the marketplace believe some regulation, particularly around principles like disclosure, understanding of risk, where people are either protected or not, they understand where their assets sit in the event of bankruptcies, are they really customer assets, etc. Those are all important. We, of course at CoinRoutes care about things like best execution and being able to execute and know that you’re getting, if not best price in a sense at least getting something reasonable. Those are all things that people want and it’s really incumbent upon the regulators to do it. What’s fascinating is more and more people are being driven to come to the conclusion that what we really need is what’s in the Loomis-Gillibrand bill. And in particular, I think it’s very telling that the SEC on one hand is making unilateral declaration of what’s a security meanwhile, they proposed a pretty comprehensive description of how assets could be classified either as securities or the type of commodity they’d define in the bill.

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That’s obviously where it needs to go. It’s a long way from happening, but when you see these things, it becomes more and more obvious that regulatory clarity is the most important thing in order to bring traditional finance into the market. Hopefully the catalyst of having to protect retail, the catalysts of more and more interests both on the retail side, an investor side and an institutional side, will continue to propel these discussions. It’s hopeful and most people believe will start to get stablecoin regulation this year. But let’s see what happens after the midterms and we understand the composition of the Congress.

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In the meantime, stay safe out there. Hopefully the eye part of this storm will last. And if I’m wrong, that is sunny days ahead. We’ll see how it goes. Thank you.